Behavioral

Question 1

Let’s say I’m working on an IPO for a client. Can you describe briefly what I would do?

Answer 1

First, you meet with the client and gather basic information – such as their financial details, an industry overview, and who their customers are.

Next, you meet with other bankers and the lawyers to draft the S-1 registration statement – which describes the company’s business and markets it to investors. You receive some comments from the SEC and keep revising the document until it’s acceptable.

Then, you spend a few weeks going on a “road show” where you present the company to institutional investors and convince them to invest. Afterwards, the company begins trading on an exchange once you’ve raised the capital from investors.

Question 2

What’s in a pitch book?

Answer 2

It depends on the type of deal the bank is pitching for, but the most common structure is:
1. Bank “credentials” (similar deals they’ve done to “prove” their expertise).
2. Summary of a company’s options (“strategic alternatives” in banker-speak).
3. Valuation and appropriate financial models (for example, if you’re pitching for
an IPO you might show where the IPO proceeds would go).
4. Potential acquisition targets (buy-side M&A deal) or potential buyers (sell-side
M&A deal). This is not applicable for equity/debt deals.
5. Summary and key recommendations.

Question 3

Walk me through the process of a typical sell-side M&A deal.

Answer 3

1. Meet with company, create initial marketing materials like the Executive Summary and Offering Memorandum (OM), and decide on potential buyers.
2. Send out Executive Summary to potential buyers to gauge interest.
3. Send NDAs (Non-Disclosure Agreements) to interested buyers along with more
   detailed information like the Offering Memorandum, and respond to any follow-
   up due diligence requests from the buyers.
4. Set a “bid deadline” and solicit written Indications of Interest (IOIs) from buyers.
5. Select which buyers advance to the next round.
6. Continue responding to information requests and setting up due diligence
   meetings between the company and potential buyers.
7. Set another bid deadline and pick the “winner.”
8. Negotiate terms of the Purchase Agreement with the winner and announce the
   deal.

Question 4

Walk me through the process of a typical buy-side M&A deal

Answer 4

1. Spend a lot of time upfront doing research on dozens or hundreds of potential acquisition targets, and go through multiple cycles of selection and filtering with the company you’re representing.
2. Narrow down the list based on their feedback and decide which ones to approach.
3. Conduct meetings and gauge the receptivity of each potential seller.
4. As discussions with the most likely seller become more serious, conduct more in-
   depth due diligence and figure out your offer price.
5. Negotiate the price and key terms of the Purchase Agreement and then announce
   the transaction.

Question 5

Walk me through a debt issuance deal

Answer 5

1. Meet with the client and gather basic financial, industry, and customer information.
2. Work closely with DCM / Leveraged Finance to develop a debt financing or LBO model for the company and figure out what kind of leverage, coverage ratios, and covenants might be appropriate.
3. Create an investor memorandum describing all of this.
4. Go out to potential debt investors and win commitments from them to finance
   the deal.

The main differences vs. an IPO: there are fewer banks involved, and you don’t need SEC approval to do any of this because debt is not sold to the “general public” but rather to sophisticated institutional investors and funds.